Report: Dell may sell itself to VMware
It already controls firm in what would amount to reverse-merger.
Round Rock-based Dell Technologies is considering a sale to VMware, a publicly held cloud computing firm that Dell already controls, according to media reports Monday.
News of the potential sale — which would effectively be a reverse-merger — comes after earlier reports that privately held Dell is weighing a variety of options, Those include an initial public offering of stock or purchasing the rest of VMware, as it looks to pay off the huge debt it took on in its acquisition of data storage company EMC Corp. in 2013.
CNBC, which first reported the potential sale on Monday, said the information came from people familiar with the matter who asked not to be named because the discussions are private.
With a sale to VMware, Dell could again become a publicly traded company without having to pass through the more complex process of an IPO, said Rob Enderle, an analyst with Oregon-based Enderle Group.
“It’s a creative way to solve a number of problems,” Enderle said.
Dell Technologies founder and CEO Michael Dell “would basically be selling the company to itself,” Enderle said. “It’s much more controlled than an IPO. With the IPO, you take a huge gamble with what is happening with the market. You don’t control the buyers. This could be cheaper and faster, and you could still rename the company Dell.”
By moving forward with a sale, Enderle said, investors could still gain a return on their investment because VMware could issue Dell shares publicly.
Investors, however, would likely see a larger return from an IPO since the process usually generates buzz for a company and initially results in a bump in share prices, Enderle said.
“Major investors would prefer more money,” he said. “There’s a certain feeding frenzy with an IPO.”
Michael Dell could take his company public again without an IPO.